Weak School Sales Drop Results at McGraw-Hill Education
by Jim Milliot -- Publishers Weekly, 1/27/2009 7:25:00 AM
A 5.4% decline in sales in its school education group led to a 2.5% decline in total revenue at McGraw-Hill Education in 2008; parent company the McGraw-Hill Cos. announced this morning. Total MHE revenue fell to $2.64 billion, while school group sales declined to $1.4 billion. Revenue in its higher education/professional/international segment increased 0.9%, to $1.3 billion. Operating profit fell 20.9%, to $316.4 million, a figure that includes $29.3 million in restructuring charges tied to the elimination of 455 positions in the group in the year.
According to MHC chairman Terry McGraw, while the school group performed well in the new adoption market, sales were off in open territories, the supplemental market as we as residual sales in adoption states. The softness that hit the school market in August continued into the fourth quarter, McGraw said, when school group sales dropped 18.6%. Worsening economic conditions facing large urban districts were exacerbated by a sharp reduction in Federal funding for Reading First programs, McGraw said.
In the higher education/professional/international segment, good gains in the U.S. college and university markets and a modest increase internationally offset a decline in the professional markets. In the higher education and professional segments, sales of digital products double digit gains. Sales in the professional segment, however, fell on new and backlist titles due to a reduction in orders from the national chains. Internationally, Spanish-language sales were soft, while sales of English-language higher education product were up in India, Asia, Europe and the Middle East.
MHC did not provide a forecast for MHE for 2009, saying only that it expects the year to be a challenging one for the entire company, given tight credit markets, budget pressures on state and local governments, reduced state adoption opportunities and a weak ad market.
